UK Energy Research Centre Demand Reduction Theme, University of Oxford Personal Carbon Allowances: A Pilot Simulation and Questionnaire Stuart Capstick and Alan Lewis Department of Psychology, Cardiff University and Psychology Department, University of Bath, respectively. UK Energy Research Centre – Demand Reduction Theme Environmental Change Institute Oxford University Centre for the Environment South Parks Road Oxford OX1 3QY www.eci.ox.ac.uk www.ukerc.ac.uk Acknowledgements The programming for the simulation used in this study was carried out by Tim Gibson of Makem Scrivener UK. The questionnaire and simulation was designed in collaboration with Deborah Strickland and Yael Parag of Oxford University. Paula Neal recruited participants for and administered the simulation. UK Energy Research Centre 2 Executive summary The present study reports two empirical methods designed to investigate people’s responses to a system of Personal Carbon Allowances (PCA). The first method entails a computer-based simulation of PCA in which participants complete a simple carbon footprint calculator and then make a series of decisions in light of a personal carbon allowance allocated to them. The design and piloting of the simulation suggests that: • The use of a computer-based PCA simulation (incorporating its own carbon footprinting tool) offers a feasible and meaningful method of evaluating PCA as a policy instrument; and more specifically of evaluating individuals’ decision-making in respect of personal carbon emissions in the context of restricted carbon allowances. The results of the simulation suggest that: • The provision of a PCA appears to influence people’s energy-use decisions, where a greater degree of restrictedness of PCA leads to more carbon- conserving choices; • There is some evidence of carbon budgeting behaviour, where patterns of choices suggest people are attempting to remain within a positive PCA (i.e. to remain ‘in the black’); • Those with higher footprints are less inclined to take certain carbon- conserving decisions than those with small footprints; whilst those who self- report to be environmentally concerned are more inclined to conserve their PCA; • Those with higher footprints show lower support for the scheme than those with smaller footprints; whilst those who self-report to be environmentally concerned are more supportive of PCA. The second study entails a comparative questionnaire, in which participants are asked to indicate willingness to reduce emissions-relevant behaviours – either in the context of a PCA scheme, carbon tax scheme, or ‘neutral’ tax scheme. The results of this questionnaire study have been inconclusive, however they have led to the implementation of a wider, national survey which is underway at the time of writing. UK Energy Research Centre 3 Introduction In response to concerns about climate change, several governments, including the UK’s, have considered introducing a Personal Carbon Allowance scheme 1 (hereafter PCA) as a way of reducing carbon emissions (Defra, 2008). In a simple version of a PCA scheme, each year, every person would be given the same number of ‘carbon credits’ (their carbon allowance) which people would need to use whenever they bought petrol, diesel, electricity, gas, coal, heating oil or a flight to go on holiday. People who use more than their allowance would have to buy more, using their own money. People who use less than their allowance could sell their credits for profit. A PCA scheme thus provides a price for carbon emissions (where previously these emissions were generally treated as externalities) and a market for trading allowances, at the level of personal emissions. More than this, such schemes, it has been argued, may increase the ‘visibility’ of personal carbon emissions and may be connected with heightening responsibility and ‘mental accounting’ of carbon, leading to individual action that limits carbon emissions. The PCA scheme has been discussed by a number of researchers (e.g. Bristow et al., 2008; Dresner, 2005; Fawcett, 2004; Fawcett et al., 2007; Roberts & Thumim, 2006; RSA, 2007; Seyfang, 2007; Starkey & Anderson, 2005) and considered by senior policy makers (David Miliband, whilst Environment Secretary, was apparently also sympathetic to the policy). However, whilst the pros and cons of PCA schemes, alongside comparable instruments of various kinds, have been vigorously debated, little or no empirical work has been conducted to appraise the claims made. Fawcett, Bottrill, Boardman and Lye (2007) have made a case for effective field trials of PCA, although they agree the costs could be between £500K and £950K and take three years to complete. In a first attempt to experimentally compare carbon taxation and PCA, Bristow et al. (2008) carried out some complex work using a ‘stated preference’ design, finding that for those indicating a willingness to reduce emissions PCA was more effective than taxation; however, more participants indicated a willingness to reduce emissions under a taxation scheme. They therefore conclude that “the evidence on relative effectiveness is mixed”. In a review of the literature for the Institute for Public Policy Research (IPPR), Capstick and Lewis (2008) show that a number of potentially positive outcomes have been anticipated by researchers considering PCA, though based on empirically untested psychological assumptions. Among these are the claims that PCA will ‘engage’ people more than carbon taxes as they become more aware of their emissions; that the scheme has more immediate effects than taxation and that it appeals to people who would otherwise be ‘immune’. Based on these putative effects of PCA, Capstick and Lewis (2008) concluded that it might be possible to gather relevant information using simple simulations of household energy decisions and questionnaires. The simulations of energy decisions could be traced over truncated time as people allocate their carbon allowances over an imaginary year. The questionnaires could be used to assess the framing effects of the PCA scheme 1 Personal Carbon Allowances would in most instances feature as a central component of a wider scheme known in various guises as ‘Personal Carbon Trading’. As our focus here is on the individual management of and response to a PCA, rather than the wider issues connected with Personal Carbon Trading, we use the former term. UK Energy Research Centre 4 compared to carbon taxes and whether or not people would reduce, at least hypothetically, their energy consumption as a result. We report here the design and results of two separate experiments to explore influences of PCA. For the first, more substantial, experiment we report the design and implementation of a PCA simulation in which participants complete a simple carbon footprint calculator, from which is derived a restricted personal carbon allowance which must then be spent/conserved in respect of a series of energy-use decisions. The simulation was designed and programmed specifically for this study and functions on the majority of desktop computers. For the second experiment, three questionnaires identical but for their framing of decisions either in PCA terms, carbon tax terms or ‘neutral’ tax terms were used to ascertain whether participants would demonstrate relative differences in preparedness to reduce emissions. The design and implementation of the questionnaire and simulation were carried out in order to test the feasibility of using such methods to evaluate PCA, and as such are considered pilot studies with potential for further application following adaptation. UK Energy Research Centre 5 The Simulation The PCA simulation used in this study allows us to assess how people might (or might not) budget carbon over time if a PCA scheme came into operation, and how budgeting might be influenced by the personal carbon footprint of participants and by their environmental attitudes. As a novel design used in the appraisal of PCA, a further important purpose of this study is to assess whether people are able to provide convincing answers to hypothetical questions about PCA – in a personalised and interactive fashion – in the absence of expensive field tests (although the fields tests may be highly desirable if the money was available to fund them). Method Participants 65 people completed the simulation. Participants were recruited by a market research professional and the simulation delivered to them via email. Following completion of the simulation, participants were requested to return their results file via email. Data gathering was structured such that responses returned were fully anonymous (contact name and details were not retained; any identifying information was deleted; only email addresses provided at participants’ own behest in order to obtain a copy of the final report were retained and these too were detached from the data set). Participants received a £10 gift voucher for their time. The participant sample was intended to include people from both genders and across a range of age and income groups The participant sample had the following characteristics: • female (N=40); male (N=25) • 20-29 years of age (N=6); 30-39 yrs (N=17); 40-49 yrs (N=22); 50-59 yrs (N=10); over 59 yrs (N=10) • Earnings of less than £20,000pa (N=5); £20-30,000 (N=10); £30-40,000 (N=6); £40,000+ (N=29); retired (N=5); ‘prefer not to say’ (N=10) Within the participants sample it can be seen there are slightly higher numbers, proportionally, of females, and of those earning above £40,000pa. Design